GST collections: CBIC rejects claim of ‘trick’, says cess exclusion was fully disclosed

The Central Board of Indirect Taxes and Customs (CBIC) on Wednesday rejected criticism over the calculation of GST growth rates, saying the government has compared tax collections on a like-for-like basis after the compensation cess was discontinued.

The CBIC's clarification came after former finance secretary Subhash Chandra Garg alleged that the government had "quietly excluded" GST compensation cess while reporting revenue growth.

He claimed that the five-month gross GST growth would be only 4.08%, and net growth 1.30%, if the cess was included.

In a post on X, Garg said gross GST collections of ₹2 lakh crore had led the government to claim growth of 14.8% in August and 11% in the first five months, but argued that the figures presented a misleading picture because compensation cess collections for 2025-26 had been left out.

Responding to the post, CBIC said the GST Council had decided to discontinue compensation cess from September 22, 2025, on all items except tobacco and related products.

The cess on tobacco and related products was subsequently removed from February 1, 2026.

"Accordingly, from the above period, there is No cess collection," the board said.

CBIC said that from November 2025, the first tax period after GST rate rationalisation, the GST revenue figures released in the public domain separately disclosed compensation cess in a table.

It highlighted that year-on-year growth was calculated on a tax base comprising CGST, SGST and IGST for the corresponding periods.

It also pointed to a footnote accompanying the figures as a disclosure of the change in the tax base.

The board said a growth rate was meaningful only when calculated on a comparable basis, with the same set of levies on both sides of the comparison.

"Otherwise, it is like comparing apples and oranges," it said.

According to CBIC, the purpose of a growth figure is to show how the tax base has moved.

It argued that including a levy that has ceased to exist in law would instead measure a different tax base and would not provide a meaningful comparison.

The board also rejected the allegation that the figures amounted to a manipulation of GST data.

"Therefore, any attempt to cherry-pick figures from two different tax bases is thoroughly misleading and mischievous," CBIC said, adding that a fair analysis should compare like with like rather than "two fundamentally different datasets".